Leading Economic Indicators and Real Estate Risk. For many home buyers and investors real estate risk is a core consideration. But what about the local market? What local information is missing in your, or ANY, online search? Did you ever wonder why real estate risk is so high for some, and some just get lucky.

One problem with comparing properties to assess value of another property is the vast differences. Anyone can see when driving a quarter-mile in any direction, especially with respect to things that affect price movement, including:

Growth rates

Vacancy growth rates

Appreciation growth rates

Demographic growth

Average income growth

Tax rates

Migration growth

Traditionally, income growth is the largest factor affecting demand and, ultimately, appreciation. Monthly updated, median income growth, especially at the Census Block Group, is one of the top leading economic indicators, to look at when debating or not to invest in real estate.

Real Estate Risk Factors, Risk Management in Real Estate, and knowing

How to Leverage Real Estate are important. RealtyTrac fails to provide its customers with income growth information, leaving out one of the largest factors affecting resale value and potential appreciation. In truth, when you look at historic periods, income only grew by 9.5%. U.S. Census Bureau, actual income gains are negated and purchasing power is actually decreased because inflation rose by 13.4% during the same period, 28 all while the value of homes increased by a staggering 54%.

The substantial rise in the value of homes during a period of declining purchasing power is virtually impossible and clear evidence of an artificial demand in the market. RealtyTrac does not consider monthly or quarterly economic factors (such as income growth, new job creation, etc.) in its property valuations.

Real Estate as an Investment and the Risk of Loss Real Estate are important to look at in your choice of investing.

What Is a Real Asset if you do not have a clue into the future? Real Estate Risk and reliance on flawed present value technology.

Instead, and like most existing AVMs (Automatic Valuation Models), RealtyTrac relies heavily on sales data and other outdated information to help determine current value. However, RealtyTrac is certainly not alone in this regard, for even many of the bigger players like Fannie Mae also use AVMs that rely upon old and ultimately irrelevant data.

Think about this: If an algorithm correctly factored all variables affecting price determination, it could not only more accurately determine true value of a property, but should be able to project future price movement with a relatively high degree of accuracy.

Real estate risk is all based upon having the most current and dependable real estate information. With a noticeable bias towards property data, a property valuations algorithm that appears too reliant upon comps and MLS association to provide an accurate determination of true value, and no price projection component. RealtyTrac is not a tool recommended for investors, consumers, lenders or real estate professionals because it fails to provide useful analysis and information to use when making an investment decision. Its failure to properly incorporate real time relevant, reliable and accurate information on all factors affecting price determination makes the price determinations inaccurate to a varying degree.

Comps and MLS associations should not be the primary factors when determining true value of any investment property.